1Q 2014 GDP – second estimate shows intangibles investments up

It is now official. The U.S. economy shrank in the first quarter of 2014 at an annual rate of 1.0%, according to data released this morning by the BEA. The decline was even greater than economists had estimated. Economists surveyed by The Wall Street Journal forecast a contraction of 0.6% while Bloomberg’s survey forecast a drop of 0.5%.
However, investments in Intellectual Property Products (IPP – i.e. research and development; entertainment, literary, and artistic originals; and software) were revised significantly upwards to a 5.1% growth rate from the first estimate of 1.5%. That was the one bright spot in an otherwise gloom analysis of the investment side of the economy (which shrank by 11.7% in total).
As I’ve noted before, breaking out the IPP numbers is a new addition to the GDP calculations. We need to better understand these estimate-to-estimate revisions to understand what the really doing. That IPP investments fluctuate quarter by quarter is understandable; that are estimates of IPP investment for a specific quarter fluctuate significantly is not.
IPP percent 1Q14 -2nd.png

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